Computer Associates 2015 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 2015 Computer Associates annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

unfavorable foreign exchange effect of $12 million compared with the year-ago period. Enterprise Solutions operating
margin for fiscal 2014 was consistent with fiscal 2013. Fiscal 2013 included income from the aforementioned $35 million
intellectual property transaction.
FISCAL FISCAL FISCAL
SERVICES 2015 2014 2013
Revenue $ 351 $ 379 $ 382
Expenses 342 357 358
Segment profit $9$22$24
Segment operating margin 3% 6% 6%
Services segment expenses include cost of professional services and assigned general and administrative expenses that are
not included within the ‘‘Cost of professional services’’ line item of our Consolidated Statements of Operations.
Services revenue for fiscal 2015 decreased compared with fiscal 2014 primarily as a result of a decrease in the size and
number of services engagements during fiscal 2015, including non-core engagements with government customers that are not
directly related to our software product sales. We have also experienced a decline in professional services engagements that
are connected to new product sales, due to a decrease in our new product sales. There was also an unfavorable foreign
exchange effect of $6 million for fiscal 2015. Operating margin for our Services segment decreased in fiscal 2015 compared
with fiscal 2014 as a result of an increase in severance costs associated with the fourth quarter of fiscal 2015 severance
actions. Operating margin for our Services segment also decreased for fiscal 2015 compared with fiscal 2014 as a result of
the decrease in revenue and lower utilization rates for services personnel due to the decrease in the number of services
engagements.
Services revenue for fiscal 2014 decreased compared with fiscal 2013 primarily due to a decrease in engagements relating to
customer education and government agencies. Operating margin for Services remained consistent for fiscal 2014 compared
with fiscal 2013.
Refer to Note 17, ‘‘Segment and Geographic Information,’’ in the Notes to the Consolidated Financial Statements for
additional information.
Bookings — Fiscal 2015 Compared with Fiscal 2014
For fiscal 2015 and fiscal 2014, total bookings were $3,609 million and $4,421 million, respectively. The
decrease in bookings was primarily due to a year-over-year decrease in renewals within subscription and maintenance
bookings. There was also a decline in professional services bookings for fiscal 2015 compared with fiscal 2014. This was
primarily due to a decrease in the size and number of professional services engagements during fiscal 2015 in connection
with lower new product sales and a reduction in non-core engagements with government customers that are not directly
related to our software product sales.
For fiscal 2015 and fiscal 2014, subscription and maintenance bookings were
$2,942 million and $3,663 million, respectively. The decrease in subscription and maintenance bookings was primarily
attributable to a decrease in our Mainframe Solutions renewals and, to a lesser extent, a decrease in our Enterprise
Solutions renewals and a decrease in new product sales that are recognized within subscription and maintenance bookings.
•
39
Total Bookings:
Subscription and Maintenance Bookings:
Renewal Bookings: For fiscal 2015, renewal bookings decreased by a percentage in the low twenties compared with fiscal
2014. Excluding the unfavorable effect of foreign exchange, renewal bookings for fiscal 2015 decreased by a percentage
in the high teens compared with fiscal 2014. This decrease was primarily due to two factors: (1) a four-year contract
renewal with a large system integrator for more than $300 million executed during fiscal 2014; and (2) the value of
contracts renewed prior to their scheduled expiration dates being lower in fiscal 2015 than we had historically
experienced. We currently expect these deals to renew in fiscal 2016, primarily in the second half of the year. We
expected the value of our fiscal 2015 renewal portfolio to decline by a percentage in the high single digits compared
with fiscal 2014, including the aforementioned large system integrator deal. For the fourth quarter of fiscal 2015, our
percentage renewal yield was in the low 90 percent range. Our percentage renewal yield was at or above 90 percent for
each quarter of fiscal 2015. We currently expect our fiscal 2016 renewal portfolio to increase by approximately
10 percent compared with fiscal 2015. Excluding a large system integrator renewal expected in fiscal 2016, we expect
our fiscal 2016 renewal portfolio to decrease by a percentage in the low single digits. Excluding the unfavorable effect